Cognizant Technology Solutions (CTSH) Q3 2022 Earnings Call Transcript

For the period ending September 30, 2022

November 2, 2022 5:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Call Participants:

Tyler Scott - Senior Director, IR

Brian Humphries - CEO & Director

Jan Siegmund - CFO

Lisa Ellis - MoffettNathanson-Analyst

Rod Bourgeois - DeepDive Equity-Analyst

Ashwin Shirvaikar - Citi-Analyst

James Faucette - Morgan Stanley-Analyst

Tien-Tsin Huang - JPMorgan Chase & Co.-Analyst

Bryan Keane - Deutsche Bank-Analyst

Darrin Peller - Wolfe Research-Analyst

Operator

Ladies and gentlemen, welcome to the Cognizant Technology Solutions Third Quarter 2022 Earnings Conference Call. . Thank you. I would now like to turn the conference over to Mr. Tyler Scott, Vice President, Investor Relations. Please go ahead, sir.

Tyler Scott - Senior Director, IR

Thank you, operator, and good afternoon, everyone. By now, you should have received a copy of the earnings release and investor supplement for the company's third quarter 2022 results. If you have not, copies are available on our website, cognizant.com.

The speakers we have on today's call are Brian Humphries, Chief Executive Officer; and Jan Siegmund, Chief Financial Officer.

Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC.

Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors. Reconciliations of non-GAAP financial measures where appropriate to the corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC.

With that, I'd like to now turn the call over to Brian Humphries. Please go ahead, Brian.

Brian Humphries - CEO & Director

Thank you, Tyler. Good afternoon, everyone. Third quarter revenue was $4.9 billion, up 5.6% year-over-year in constant currency, short of our expectations. Adjusted operating margin grew 90 basis points sequentially and 60 basis points year-over-year to 16.4% of revenue. While a non-certain macroeconomic backdrop impacted bookings and revenue, the primary driver of the revenue shortfall relates to a reduction in U.S. onshore billable resources in recent quarters, following a period of elevated attrition, a reduction in visa travel and a COVID-induced shift in the near and offshore delivery centers. Financial impact of this headcount reduction is magnified given this is our highest revenue and margin dollar per head population.